India’s FY25 GDP growth forecast raised 7% from 6.5% by Fitch

March 14, 2024

On Thursday, March 14, Fitch Ratings revised India’s gross domestic product (GDP) growth forecast for fiscal year 2024-25 upward to 7%, up from the previous estimate of 6.5%.

This adjustment was detailed in Fitch’s March 2024 Outlook report, where the global ratings agency expressed confidence in India’s economy continuing its “strong expansion” in the coming fiscal year.

Fitch’s report also indicated brighter prospects for emerging markets, particularly in India. The agency now expects India’s growth to reach 7.8% for the fiscal year ending March 2024 (FY24) and 7% in FY25.

“After three consecutive quarters of GDP growth exceeding 8%, we anticipate a slowdown in momentum in the final quarter of this fiscal year, resulting in an estimated 7.8% growth for FY24,” the report stated.

Fitch forecasts suggest that India’s growth will surpass the economy’s estimated potential in the short term, though it expects a moderation to 6.5% in real GDP growth for FY25.

Regarding monetary policy, Fitch anticipates the Reserve Bank of India (RBI) to begin cutting the repo rate – the interest rate at which the central bank lends to commercial lenders – in the second half of calendar year 2024. The agency projects a reduction of 50 basis points (bps) between July and December. The current repo rate stands at 6.5%, having remained unchanged for the sixth consecutive time during the last policy review meeting.

Fitch also predicts a cooling down of retail inflation in India to 4% by the end of 2024, aligning with the central bank’s medium-term inflation rate target.

On a global scale, Fitch adjusted the 2024 global GDP growth forecast by 0.3 bps to 2.4%, citing improved near-term world growth prospects. The agency highlighted a stronger outlook for the US economy, now projected to grow at 2.1% compared to the previous forecast of 1.2%. China’s forecast was slightly reduced to 4.5% from 4.6%, and there was a minor adjustment for the Eurozone, down to 0.6% from 0.7%.

Growth projections for emerging markets, excluding China, were revised up by 0.1 bps to 3.2%, with increases noted for India, Russia, and Brazil.

Looking ahead to 2025, Fitch maintained the global GDP growth rate forecast at 2.5%.